Whew! That was a big one. On the night of 25 July 2022, South African President Cyril Ramaphosa finally addressed the nation on the rolling power outages that have hit the country during the winter months, stating that he was lifting the licensing threshold for embedded energy generation projects.

This follows the recent Amendment to Schedule Two of the Electricity Regulation Act 4 of 2006 in June 2021 that increased the threshold for embedded generation from 1Megawatt (MW) to 100MW without the need for a license.

President Ramaphosa’s intervention came a few days after former president Thabo Mbeki’s speech at former African National Congress (ANC) Acting Secretary-General Jessie Duarte’s funeral in which he said that South Africa was a rudderless ship, unmoored and just drifting aimlessly in the sea. “There is no national plan to address the challenges of poverty, unemployment, inequality. It doesn’t exist,” said Mbeki.  

Those words must have stung, coming from a man whose legacy President Ramaphosa has worked tirelessly to rehabilitate after his self-imposed exile from the ANC following the bruising Limpopo conference. They would have stung even more because President Ramaphosa is a man badly in need of allies. Everybody knows that Ramaphosa won a razor-thin majority during the last elective conference, and this explains why he has had — as the Inkatha Freedom Party’s Mkhuleko Hlengwa termed it — a mega presidency.

But I digress. President Ramaphosa’s speech, just like his announcement in 2021, focused on offering capitalist, free-market solutions to the country’s power woes. We have to look at the good and the bad of his announcement.

First to the all-important question: does the president’s speech mean that rolling blackouts — “load shedding” — are about to end? The answer is not quite and we shall see why below. 

Changes to power generation in South Africa

President Ramaphosa admitted to a number of things that are important to repeat here. Firstly, he indicated that only 60% of installed capacity is available at any given time due to planned maintenance and unplanned outages. This is true, although the availability percentage could be slightly lower given that we have seen several rounds of rolling blackouts where up to 20,000MW was taken off the grid.

The president also admitted that rolling blackouts are an albatross around the country’s neck. It affects the country in a number of ways.

Firstly, tax-paying businesses with many employees cannot go about their daily activities when the lights go off. Secondly, there are millions of South Africans who would love to have electricity for innovation and business but cannot get it due to a lack of capacity and prohibitively high prices. Thirdly, rolling blackouts just saps the mood of the public and we can see this through interactions on social media and the declining number of high earners who are either leaving South Africa’s shores or installing rooftop PVs, thereby taking some of their business away from their local municipality. Even without islanding, municipalities are losing quite a bit of money in this process.

On a positive note, there is the important admission that over 2,000MW of solar and wind power has been connected to the grid through Bid Window 4 of the Renewable Energy Independent Power Producer Procurement Programme between 2018 and 2022, and that a further 2,600MW, procured through Bid Window 5 will be connected to the grid from early 2024.

In other words, South Africa is on course to install the equivalent of Kenya and Zimbabwe’s combined total generation capacity through renewables alone in under a decade.

Add to that Medupi and Kusile, plus many smaller IPP deals and you will see that South Africa has installed as much as Nigeria’s total installed capacity since 2007 when rolling blackouts were first announced.

However, this success is masked by the fact that part of Eskom’s fleet is over half a century old and like André de Ruyter, Mandy Rambharos, Jan Oberholzer and even President Ramaphosa have said: it is like a really old car — some days it works, some days it just shuts down.

Solutions

Now to the solutions suggested by the president.

Eskom needs at least 6,000MW of electricity now. Improving maintenance will help in the short term. Nevertheless, we are talking about the same old car, aren’t we?

So we need to add brand new capacity. The lifting of the licensing threshold is going to help, but then you still need people to take up the opportunities on offer. That requires a lot of money. Eskom has made land available in some parts of the country and waived environmental impact assessment study requirements (not a good thing, but let’s continue with the main argument) as well as some regulation, including on local content and so on, but building power stations takes years.

The next solution is purchasing some power from neighbouring countries. The president mentioned the Southern African Power Pool in his speech, but then, South Africa is the biggest economy in the region. In fact, Gauteng consumes more power than the rest of SADC combined.

South Africa already gets some hydropower from Mozambique. Maybe the President was making a nod to Zambia’s Zesco which has just declared that it has a surplus capacity of about 1,000MW that it can sell. It is a bit ironic that Zambia is declaring a surplus of 1,000MW even as it suffers with daily blackouts. Is it just fundraising to pay off its Chinese debts? Maybe.

To President Ramaphosa’s solutions again. There is the just transition money to replace some pf the old coal fleet, and then there is bid window six for wind and solar which has been doubled to 5,200MW. All this is to say that many good reforms were announced, but it will still take South Africa at least three to four years to get out of the woods.

The developmental agenda

Now to the scary part (I do not want to say the bad). The president announced in his speech that: “the grid will remain state-owned”. This comes after the announcement last year of the creation of the National Transmission Company South Africa SOC Limited (NTCSA) by De Ruyter as well as repeated talk of the Chinese and Dutch models by Minerals and Energy Minister Gwede Mantashe.

My problem here is that while fast in development and onstreaming, IPPs are not necessarily the ideal solution for South Africa. The I in IPP means independent, ergo market-based. The Democratic Alliance, which has been cheering many of these announcements, in pushing for completely market-based solutions is working for its base, which is not necessarily the majority of South Africans.

The majority of South Africans still need the state. Electricity in South Africa must continue to serve a developmental purpose, and for this reason, the state must continue to play a significant role in power generation. It simply cannot surrender too much of this role.

Developmentalism means that you provide the dynamo that is required to create jobs, expand innovation, set up new industries and so on. As France has lost ground to countries like India, one of the ways it is fighting back is by buying back the 15% of Electricité de France (EDF) that it does not own. South Africa must do everything to keep Eskom in government hands.

Conclusion

The arrogant sneering of the renewables naysayers is dying down as we see every day that agile structures like De Aar 1 & 2, Jasper, and the recently announced Scatec 1, 2 & 3 can install enough electricity to light up all of Kimberley in just two years. Now, we can move past the technical debates and talk about real stuff.

When the president said that “we must join in a massive roll-out of rooftop solar and contribute to the solution”, I was expecting him to follow up with a plan for the middle class. Banks tend to offer only market solutions and will add another few years to your bond, but the state can solve this headache by giving ordinary people the resources to also produce power. This would help the just transition in many ways. It would make the energy sector greener, but it would also create jobs, and stimulate new industries like battery and PVs.

The poor and vulnerable must also be associated with finding solutions to the country’s energy problems — the President also mentioned this in his speech.

So all in all, not yet uhuru but we’re on track. DM